Makes various changes to statutes governing the Public Safety Personnel Retirement System, including prohibiting members from taking a loan against or removing contributions from their account prior to termination of membership or receipt of a pension, exempting stocks acquired for coinvestment with the system's investments and interests in mutual funds from certain investment requirements, and modifying provisions for contributions by retired members who are reemployed following retirement. PSPRS will no longer pay part of the single coverage premium of any group health insurance premium for members who retire or become a survivor on or after the effective date of this legislation and who are reemployed and participate in employer-provided health care coverage. Paid full-time firefighters employed directly by a joint powers authority (identified elsewhere in statute as a separate legal entity formed by government entities to jointly exercise common powers for a fire district) are added to the definition of "eligible group" for the PSPRS. Establishes PSPRS local board membership for joint powers authorities. For purposes of the public safety officer supplemental benefits plan for duty-related injuries, a retired member of PSPRS who is a certified peace officer is added to the definition of "member." AS SIGNED BY GOVERNOR.

Various changes to statutes governing the Arizona State Retirement System, including making the statutory formulas for benefit increases apply only to ASRS members whose membership began before the effective date of this legislation. Beneficiaries of deceased members who are receiving a survivor benefit and their dependents are added to the types of members eligible for ASRS group health insurance. Effective January 1, 2014, beneficiaries of survivor benefits no longer have the option of receiving benefits as a monthly income for a certain number of years, but may elect to receive the benefit as monthly income for life if the resulting monthly amount is at least a certain threshold amount determined by the ASRS Board. Appropriates $200,000 from the ASRS Administration Account Fund in FY2013-14 to the ASRS for implementation.

Makes several changes to statutes governing the Arizona State Retirement System, including exempting information about ASRS members from public records laws and specifying what information about ASRS members is subject to public inspection. The ASRS Board is authorized to establish a self-insurance program for group health insurance coverage for eligible retired and disabled members and their dependents. The public records changes are retroactive to July 1, 2013. AS PASSED HOUSE.

Numerous changes related to transaction privilege taxes (TPT) and affiliated excise taxes. The Department of Revenue is required to provide a coordinated electronic method of collecting state and municipal TPT and affiliated excise taxes. The Dept is required, rather than permitted, to collect and administer TPT and use taxes imposed by municipalities and to enter into intergovernmental agreements with municipalities to provide a uniform method of administration, collection, audit and licensing of TPT and affiliated excise taxes. The contract or agreement must include criteria for the denial of a request from a municipality for an audit of a taxpayer that is engaged in business in more than one municipality. The Dept and municipalities that levy TPT and affiliated excise taxes are required, rather than permitted, to enter into agreements to provide for unified or coordinated licensing, collection and auditing programs for such taxes. Required provisions for the intergovernmental agreements are specified, including that all audits must be conducted in accordance with standard audit procedures defined by the Dept, and that all audits must include all taxing jurisdictions regardless of which jurisdiction conducts the audit, with some exceptions. Municipalities are no longer prohibited from employing auditors on a contingent fee basis. For the period beginning January 1, 2015 through December 31, 2015, municipalities are authorized to enter into an agreement with the Dept whereby the Dept furnishes personnel to perform audit services and the municipality pays the Dept an agreed upon amount. By January 1, 2015, the online portal for the administration and collection of TPT and affiliated excise taxes must be modified so that a taxpayer who is required to pay any TPT and affiliated excise taxes to the state or a county or municipality may report and pay the required tax through the online portal. The portal must be administered by the Dept, and the costs of the portal must be paid by the municipalities that did not have an intergovernmental contract or agreement in effect as of January 1, 2013 with the Dept to provide for unified or coordinated licensing, collection and auditing programs. The expanded portal is required to include a single point for licensing and filing a single return for TPT for all taxing jurisdictions, consolidate data and capture data with sufficient specificity to meet the needs of all taxing jurisdictions, and allow for identification of the correct taxing jurisdictions and tax rates based on where the transaction is sourced. Taxpayers can no longer be charged a fee to use the portal. Taxpayers that do not report and pay the required tax to a municipality through the portal are required to file and pay the tax to the Dept, if the Dept has developed the tools necessary to capture data with sufficient specificity to meet the needs of all taxing jurisdictions. Confidential information relating to any tax collected by the Dept on behalf of any jurisdiction may be disclosed to any county or municipal tax official if the information relates to a taxpayer who is or may be taxable by the county or municipality or who may be subject to audit by the Dept. Requirements for the sourcing of transactions are established. Retail sales of tangible personal property must be sourced to the seller’s business location if the seller receives the order at a business location in Arizona, or to the purchaser’s location in Arizona if the seller receives the order at a business location outside of Arizona. For the purposes of municipal excise taxes, the jurisdiction with the right to tax a sale of tangible personal property is the municipality where the order is received (defined), or where the stock is located from which the property is taken, or where the transfer of title or possession of the property occurred. The gross receipts from leasing or renting tangible personal property must be sourced to the lessor’s business location in Arizona or to the lesee’s address if the lessor does not have a business location in Arizona. The list of exemptions from the retail TPT classification is modified to remove sales of property, other than motor vehicles, to nonresidents for use outside the state if the vendor ships or delivers the property out of the state, and sales of property that is shipped or delivered directly to a destination outside the U.S. for use in a foreign country. The deductions for TPT and affiliated excise taxes do not include machinery and equipment or tangible personal property used by a contractor in the performance of a contract. The list of deductions from gross income derived from the business of prime contracting for the purpose of computing the TPT base and the list of income exempt from municipal TPT are expanded to include gross income derived from a contract with the owner of real property for the maintenance, repair or replacement of existing property if the contract does not include "modification" (defined) activities. The Dept is required to prescribe a form for a certificate to be used by a contractor that is not subject to the prime contracting classification when purchasing tangible personal property to be incorporated or fabricated by the person into any real property, structure or improvement. The contractor must obtain a new certificate for each project and must meet specified conditions to qualify for the certificate. The owner builder sales transaction privilege tax classification is eliminated. The maximum rate for a county’s transportation excise tax on jet fuel is changed to 10 percent of the rate levied by the state, instead of .305 cents per gallon of jet fuel sold. The Joint Legislative Budget Committee is required to prepare a report of the revenue impact analysis resulting from this legislation by September 30, 2016, and to provide copies of the report to the Governor and the Legislature. The analysis must include an estimated impact on revenues for the state and the counties and municipalities. Effective January 1, 2015. AS SIGNED BY GOVERNOR.

The State Transportation Board is authorized to issue parity bonds to refund or refinance any outstanding bonds if certain criteria are met. On a monthly basis, the Director of the Department of Transportation is required to deposit 1.6 percent of motor vehicle fuel tax monies in the State Lake Improvement Fund. Repeals statute requiring the Dept to conduct a survey to determine the taxes paid on fuel for watercraft in order to determine the amount put in the Fund. The maximum amount of the bond required of a motor fuel supplier is increased to $5 million, from $1 million. AS SIGNED BY GOVERNOR.

Establishes an individual income tax credit for the amount of fees or cash contributions paid by a taxpayer to a state university foundation located in Arizona. The amount of the credit cannot exceed $250 for a single individual or head of household, or $500 for a married couple filing jointly. If the allowable credit exceeds taxes due, the taxpayer may carry the unused amount forward for up to five consecutive taxable years.

The Auditor General is required to conduct a special audit to evaluate the costs of each measure that is voter protected pursuant to Article 4, Part 1, Section 1 of the state Constitution. The Auditor General must submit copies of the audit to the Governor and the Legislature by August 15, 2014.

Beginning July 1, 2014 through June 30, 2019, an “export oriented manufacturer” (defined) may be certified by the Arizona Commerce Authority to have personal property and improvements newly constructed or that undergo a major renovation between January 1, 2014 through June 30, 2019 qualify for classification as class 6 property. The business must be a manufacturing operation, corporate or regional headquarters, administrative office or research and development operation of the manufacturer, must invest specified amounts and create a minimum number of “qualified employment positions” (defined), and must pay at least 51 percent of new employees at least a specified wage depending on the county. To be annually recertified, a business must continue to meet all eligibility requirements and must annually report specified information to the Authority. To receive classification as class 6 property, by December 10 of each year the certified business must submit specified information to the county assessor. The Authority and the Department of Revenue are required to report information on certified businesses and the fiscal impact of property tax incentives to the Governor and the Legislature by September 30 of each year. Additionally, the list of subtractions from Arizona gross income for income tax purposes is expanded to include the following percentage of compensation and net income from self-employment, up to $113,700: 0.5 percent for tax year 2013, 1 percent for tax year 2014, 1.5 percent for tax year 2015, and 2 percent beginning tax year 2016. AS PASSED HOUSE.

The commercial lease classification for transaction privilege tax does not include leasing real property between "affiliated companies, businesses or persons," defined as the lessor owning at least 80 percent interest in the lessee, the lessee owning at least 80 percent interest in the lessor, or an affiliated entity or unrelated person owning at least 80 percent interest in both, or leasing real property by a "reciprocal insurer" (defined elsewhere in statute). Municipalities and special taxing districts are prohibited from levying a transaction privilege or use tax on gross income derived from leasing real property between affiliated companies, businesses or persons, or by a reciprocal insurer. AS SIGNED BY GOVERNOR.

New special taxing districts cannot be formed within the jurisdiction of a political subdivision if the sum of that political subdivision's property taxes and the aggregate amount of property taxes being levied by all other special taxing districts located in any portion of that political subdivision exceeds the constitutional limit on local ad valorem tax levies. Special taxing districts are prohibited from levying a new or increased property tax if the sum of property taxes of any political subdivision in which any portion of the district is located and the aggregate amount of property taxes being levied by all other special taxing districts located in any portion of that political subdivision exceeds the constitutional limit on local ad valorem tax levies. New industrial development authorities cannot be formed within the jurisdiction of a political subdivision if the sum of that political subdivision's expenditures and the aggregate expenditures by all other industrial development authorities located in any portion of that political subdivision exceeds the constitutional local government expenditure limit. An industrial development authority is prohibited from making a new or increased expenditure if the sum of the expenditures of any political subdivision in which any portion of the authority is located and the aggregate expenditures by all other industrial development authorities located in any portion of that political subdivision exceeds the constitutional local government expenditure limit. Additionally, public bonds cannot be issued by any entity that is not governed by an elected governing body. Session law declares the bonding limitations and aggregate taxation and expenditure limitations in this legislation are of statewide concern and preempt any local government ordinance, charter, policy or rule to the contrary. Severability clause.

The list of items exempt from retail transaction privilege taxes is expanded to include the sale of "cash equivalents," defined as items or intangibles through which a value denominated in money is purchased in advance, including gift cards, vouchers, traveler's checks, and money orders or other instruments. The gross proceeds of sales or gross income derived from the redemption of any cash equivalent as a means of payment for taxable goods or services is subject to transaction privilege tax. Session law declares the intent of the Legislature to clarify and reaffirm an existing exemption from TPT for cash equivalents. Retroactive to tax period beginning January 1, 1999. Any claim for a refund of TPT based on the retroactive application must be submitted to the Department of Revenue by December 31, 2013. The aggregate amount of refunds cannot exceed $10,000, including interest. AS SIGNED BY GOVERNOR.

The maximum amount of income tax refunds for increased research activities that the Arizona Commerce Authority is authorized to approve each year would have been $10 million in 2014 and $15 million in 2015 and after, increased from $5 million. During the first six months of a calendar year, the Authority could not have approved refunds exceeding 50 percent of the limit. During the second six months, the remaining balance of the limit could have been approved. Effective January 1, 2014. AS VETOED BY GOVERNOR. Her veto message stated that a refundable tax credit such as this one needs the highest level of scrutiny, and that she believes it is best to re-examine this proposal in light of next year's spending priorities.

The Department of Revenue is required to determine the valuation of the electric distribution and transmission property of a "distribution cooperative" (defined elsewhere in statute) operating in Arizona. Formulas and calculations for the determination of valuation are established. Applies to valuation years beginning January 1, 2014. AS SIGNED BY GOVERNOR.

The annual tax levy for both the principal and interest payment on local government bonds, including a reasonable tax delinquency factor, is prohibited from exceeding the net amount necessary to make the annual bond payment and the reasonable delinquency factor, including an amount necessary to correct prior year errors in the levy and any expenses and fees required by federal tax laws. The list of eligible investments for public monies invested by the State Treasurer is modified to include bonds of special taxing districts, and to allow investment in any evidences of indebtedness that are denominated in U.S. dollars and that carry at least an "A" rating from two or more nationally recognized rating agencies. The requirement that bonds or notes invested in by the State Treasurer be issued by corporations organized and doing business in the U.S. is eliminated. AS SIGNED BY GOVERNOR.

Monies received for and belonging to the state resulting from compromises or settlements by or against the state must be credited to the general fund unless specifically credited to another fund by law, excluding "restitution" (defined) and reimbursement to state agencies for costs or attorney fees. A fund consisting of monies othar than monies received for restitution, costs or attorney fees cannot be established by court order without prior legislative authorization. On or before January 15, April 15, July 15 and October 15, the Attorney General is required to file with the Governor and the Legislature a full and complete account of the deposits into the state treasury made from compromises and settlements in the previous calendar quarter. Establishes the Consumer Restitution and Remediation Revolving Fund to be administered by the Attorney General. Establishes subaccounts in the Fund consisting of monies collected or received by the Attorney General as a result of settlements or compromises meeting specified conditions. On or before January 15, April 15, July 15 and October 15, the Attorney General is required to file with the Governor and the Legislature a full and complete account of the receipts and disbursements from the Fund by subaccount in the previous calendar quarter. AS SIGNED BY GOVERNOR.

The maximum aggregate amount of class B bonds issued by a school district is increased to 10 percent of the taxable property used for secondary property tax purposes, from 5 percent. The maximum aggregate amount of class B bonds issued by a unified school district is increased to 20 percent of the taxable property used for secondary property tax purposes, from 10 percent. The new limits apply to bonds issued pursuant to elections held both before and after the effective date of this legislation. AS PASSED HOUSE.

Municipalities are authorized, on presentation of a petition signed by the owners of at least 51 percent of the relevant land, to form revenue allocation districts to undertake projects for economic development, reduce the loss of commerce or employment, or increase employment. Regulations are established for revenue allocation districts, including district formation and dissolution, district powers, and authority to issue bonds and levy taxes. Elections are required to approve bond issuance and regulations on the terms of bonds are established. District projects may be financed from the sale of revenue bonds or general obligation bonds, tax revenues from increment value of taxable real and personal propoerty allocated to the district by the municipality, incremental increases in transaction privilege tax revenue, and any other means lawfully available. Contains legislative findings. AS PASSED HOUSE.

For tax years 2013 through 2015, an individual and corporate income tax credit of up to $1 million is established for a taxpayer who hires an employee who is a veteran of the U.S. armed forces and who is collected unemployment benefits at the time of hiring, if the employee's compensation is at least equal to the median annual wage in Arizona. The amount of the credit is the lowest of either 10 percent of the employee's salary, $2,000 for an employee, or $4,000 for an employee with a specified disability. If the amount of the credit exceeds taxes due, the taxpayer may carry forward the unused amount for up to five consecutive taxable years. Also, the Department of Administration and the Department of Veterans' Services are required to develop and implement procedures that provide veterans with access to employment announcements 72 hours before public dissemination. Effective January 1, 2014, the Department of Administration is required to establish a veteran-owned business participation goal of awarding state procurement contracts to veteran-owned businesses. The goal applies to the overall dollar amount spent each year on state procurement contracts, and must be at least 1.5 percent during the first year and increase to 3 percent or more for every year after. AS PASSED HOUSE.

The county treasurer is required to assign a tax lien against real property to a third party if he/she receives a written authorization from the property owner to assign the lien to the third party and payment in the amount of the taxes, interest and penalties due on the property. The property owner and the third party are permitted to enter into an agreement for payment of all amounts secured by the lien. The assignment and payment agreement must be filed with the county recorder and are prima facie evidence of the valid assignment of the lien. If the property owner defaults on the payment agreement, the assignee of the tax lien may foreclose.

The purposes for which an improvement district may be formed are expanded to include maintaining, repairing and replacing a district's street lighting facilities. Applies to any municipal street lighting improvement districts formed by a municipality before or after the effective date of this legislation.

Beginning with tax year 2013, when computing Arizona adjusted gross income for tax purposes, the amount in excess of $25,000 for property for which an expense deduction was taken under the internal revenue code for certain depreciable business deductions is no longer required to be added to Arizona gross income. AS SIGNED BY GOVERNOR.

When computing the transaction privilege tax base for the prime contracting classification, the deduction from gross income for the installation, assembly, repair or maintenance of machinery, equipment or other tangible personal property that does not become a permanent attachment to a building or other structure is changed to exclude property that has an "independent functional utility" (defined as able to independently perform its function without attachment to real property other than specified forms of attachment) instead of property that does not become a permanent attachment. The list of items that municipalities and special taxing districts are prohibited from levying a transaction privilege or use tax on is expanded to include the gross proceeds of sales or gross income derived from a contract for the installation, assembly, repair or maintenance of machinery, equipment or other tangible personal property that has independent functional utility. Retroactive to taxable periods beginning July 1, 1997. Any claim for refund of tax based on the retroactive application is considered timely filed if filed with the Department of Revenue or the appropriate municipality by December 31, 2013. The aggregate amount of refunds based on the retroactive application is capped at $10,000. Contains a legislative intent section. Savings clause. AS SIGNED BY GOVERNOR.

The Arizona Power Authority is authorized to finance or refinance the state's proportionate share of the costs incurred by the U.S. for the Hoover visitor facilities and the state's proportionate share of the costs incurred by the federal Bureau of Reclamation for the air slot treasury loan for the construction of air slots at Hoover Dam. The Arizona Power Authority is authorized to pledge its contracts, rights and interests in or to power and energy from the Hoover power plant as security for bonds and notes for the Hoover visitor facilities or the air slots at Hoover Dam. AS SIGNED BY GOVERNOR.

State government would have been required to post the previous year's actual state budget total on its website's home page, including the amount of monies that came from the general fund, other appropriated funds and federal funds. The list of information that local government websites listed on the Department of Administration internet web portal must contain would have been expanded to include the previous year's actual budget total. The budget information would have had to be updated within 90 days after the end of each fiscal year. AS VETOED BY GOVERNOR. Her veto message stated that the bill is duplicative and not adequately defined.

Establishes an Elected Officials’ Defined Contribution Retirement System (EODCRS) for elected officials who are elected or appointed on or after January 1, 2014 and who were not a member of the plan on December 31, 2013. Beginning January 1, 2014, the EODCRS is the retirement program for elected officials, and elected officials must be enrolled in the defined contribution plan established by the Public Safety Personnel Retirement System (PSPRS). The PSPRS Board is responsible for the administration of the EODCRS, and is required to annually report the status of the EODCRS to the Governor and the Legislature. Each EODCRS member must contribute eight percent of gross compensation by salary reduction, which is deposited in the member’s annuity account. Each employer is required to annually make a contribution equal to six percent of each member’s gross compensation. Also establishes an EODCRS disability program and requires all EODCRS members to participate in the disability program. Beginning January 1, 2014, employers are required to contribute the percentage of the gross compensation of all the EODCRS members under their employment so that the total employer contributions equals the amount the PSPRS Board determines is necessary to pay 1/2 of all benefits under and costs of administering the disability program, and members are required to contribute the same amount. Employer and employee disability contributions must be determined by the system actuary in an annual valuation using specified methods. Eligibility for a disability benefit and the amount of the benefit is determined in the same manner as EORP disability benefits. A person who knowingly falsifies any record of the disability program with intent to defraud is guilty of a class 6 (lowest) felony. Retired members of the EODCRS may elect to obtain group health insurance coverage through the Arizona State Retirement System, but must pay the premium for the coverage selected and are not eligible for premium assistance benefits. The Elected Officials’ Retirement Plan (EORP) is available only to elected officials who were a member of the plan before January 1, 2014. An elected official who is elected or appointed on or after January 1, 2014 and who was not a member of the plan on December 31, 2013 is not eligible for EORP. Beginning January 1, 2014 through June 30, 2044, each EORP employer is required to make level percent compensation contributions of 23.5 percent of the compensation of all employees who are members of EORP or the EODCRS to meet the normal cost plus an amount to amortize the unfunded accrued liability. This employer contribution cannot be used to pay for an increase in benefits to members. In FY2013-14 through FY2042-43, appropriates $5 million in each FY from the general fund to the EORP Fund to supplement the normal cost plus an amount to amortize the unfunded accrued liability. These appropriations cannot be used to pay for an increase in benefits to members. AS SIGNED BY GOVERNOR.

Would have established an individual income tax credit for the pro rata amount of contributions made by a business to school tuition organizations (STO). Co-owners of a business could have each claimed the pro rata share of the corporate income tax credit allowed based on the taxpayer's ownership interest. The total of the credits allowed by all the owners could not exceed the amount that would have been allowed a sole owner of a business. If the credit exceeded taxes due, the taxpayer could have carried the amount of the claim not used to offset taxes for up to five consecutive tax years. The tax credit would not have been allowed if the business designates the contribution to an STO for the direct benefit of any dependent of the taxpayer or designates a student beneficiary as a condition of the contribution to an STO. The lists of amounts that must be added to and subtracted from Arizona gross income when computing Arizona adjusted gross income for income tax purposes would have been modified to reflect the pro rata credit. Retroactive to tax years beginning January 1, 2013. AS VETOED BY GOVERNOR. Her veto message stated that this legislation would be unnecessarily burdensome for the Department of Revenue to administer.

Numerous changes related to transaction privilege taxes (TPT) and affiliated excise taxes. Requirements for the sourcing of transactions are established, effective January 1, 2014. Retail sales of tangible personal property must be sourced to the seller’s business location if the seller receives the order at a business location in Arizona, or to the purchaser’s location in Arizona if the seller receives the order at a business location outside of Arizona. For the purposes of municipal excise taxes, the jurisdiction with the right to tax a sale of tangible personal property is the municipality where the order is received (defined), or where the stock is located from which the property is taken, or where the transfer of title or possession of the property occurred. The gross receipts from leasing or renting tangible personal property must be sourced to the lessor’s business location in Arizona or to the lesee’s address if the lessor does not have a business location in Arizona. The list of exemptions from the retail TPT classification is modified to remove sales to nonresidents for use outside the state if the vendor ships or delivers the property out of the state, and sales of property that is shipped or delivered directly to a destination outside the U.S. for use in a foreign country. Effective January 1, 2015, the prime contracting and owner builder sales transaction privilege tax classifications are eliminated and replaced with a manufactured building dealer classification. The sale of tangible personal property to a “contractor” (defined), regardless of whether it will be incorporated into a building or structure, is considered to be a retail sale and is subject to retail TPT unless otherwise exempt. Prime contracting TPT distributions to political subdivisions are deleted. Tangible personal property sold to a manufactured building dealer is only exempt from the retail TPT classification only if the property is to be incorporated or fabricated into a manufactured building. Numerous items are removed from the list of deductions from the tax base for the manufactured building dealer classification (formerly prime contracting). Once the distribution of revenues for municipal or county infrastructure improvements related to manufacturing facilities has reached the maximum amount, 40 percent of the remaining TPT revenues from the retail classification are designated as the distribution base for state shared revenues, increased from 20 percent. The Department of Revenue is required, rather than permitted, to collect and administer TPT and use taxes imposed by municipalities and to enter into intergovernmental agreements with municipalities to provide a uniform method of administration, collection, audit and licensing of TPT and affiliated excise taxes. Municipalities are prohibited from employing auditors and entering into contracts with a party other than the state for the collection, administration and processing of TPT or affiliated taxes. Municipalities are prohibited from levying a TPT or use tax on construction contracting, owner builder sales or speculative building. Municipalities are no longer prohibited from levying a TPT or use tax on sales of motor vehicles to nonresidents for use outside the state or on any amount attributable to development fees incurred in relation to construction. Effective January 1, 2014, if a county or special taxing district levies one or more excise taxes on the effective date of this legislation, and if approved by the voters at a county-wide or district-wide election, a county or district is authorized to levy an excise tax on the storage, use or consumption in the county of tangible personal property purchased from a retailer, as a percentage of the sales price. The tax must be at a rate equal to the sum of the rates of all the excise taxes levied on the effective date. The Department of Revenue is required to collect the tax. Session law provides that this legislation does not apply to or affect the tax liability of contracts entered into before January 1, 2015 by a person engaged in business under the prime contracting classification or the construction contracting, owner builder or speculative builder classification of the model city tax code, or to the sale of tangible personal property to a contractor for incorporation into a project that was subject to a tax deduction.

The 2014 general election ballot is to carry the question of whether to amend the state Constitution to charge the Economics Estimates Commission with annually determining a "stabilized appropriation limit" using the amount of actual general fund expenditures for FY2012-13 adjusted to reflect “cost of living” (defined) and population changes. Beginning in FY2015-16, the Legislature is prohibited from appropriating state revenues in excess of the limit except by a 2/3 vote. The limit does not apply to payments on debt principal. Any legal resident of the state has standing to enforce this requirement in court.

The 2014 general election ballot is to carry the question of whether to amend Article IV, Part 1, of the state Constitution to place an eight-year limit on any initiative or referendum that authorizes or requires the expenditure of state monies. After the eight-year period expires, the measure must be re-referred to the ballot for a vote of the people. All current ballot measures that authorize or require an expenditure of state monies and that were originally voted on more than eight years before this amendment is certified shall be placed on the 2016 general election ballot for reauthorization.

The commercial lease classification for transaction privilege tax does not include leasing real property by a reciprocal insurer, company, business or person to an “affiliated reciprocal insurer, company, business or person,” defined as the lessor owning at least 80 percent interest in the lessee, the lessee owning at least 80 percent interest in the lessor, or a third party owning at least 80 percent interest in both. Municipalities and special taxing districts are prohibited from levying a transaction privilege or use tax on gross income derived from a commercial lease in which a reciprocal insurer, company, business or person leases real property to an affiliated company, business or person. AS PASSED SENATE.

Taxpayers with annual transaction privilege tax liability between $2,000 and $8,000 are required to pay TPT on a quarterly basis (instead of a monthly basis), and taxpayers with annual TPT liability of less than $2,000 are required to pay on an annual basis. (Formerly, taxpayers with less than $500 annual TPT liability were permitted to pay annually, and taxpayers with between $500 and $1,250 annual TPT liability were permitted to pay quarterly).

Effective January 1, 2015, makes various changes to statute in order to conform to Proposition 117 from the 2012 general election ballot (property tax assessed valuation; limitation). Applicable beginning with property tax valuations made in 2014 for tax year 2015. AS SIGNED BY GOVERNOR.

For the purpose of computing Arizona gross income for income taxes, the maximum amount that can be subtracted for contributions to college savings plans is increased to $2,000 for a single individual or $4,000 for a married couple filing jointly, from $750 for a single individual or $1,500 for a married couple filing jointly. Effective January 1, 2013. AS PASSED SENATE.

Makes various changes relating to tax incentives, deductions, and exemptions. A "qualified destination management company" (defined) is not subject to transaction privilege taxes on the gross proceeds of sale or gross income derived from a "qualified contract" (defined) for "destination management services" (defined). A qualified destination management company is a final consumer and user of any tangible personal property, activity or service subject to transaction privilege tax that the qualified destination management company arranges under a qualified contract for destination management services. Applies retroactively to tax years beginning January 1, 2002. Any claim for a refund based on the retroactive application must be submitted to the Department of Revenue by December 31, 2013. Interest cannot be allowed or compounded on a refund paid before July 1, 2014. The total amount of refunds issued is limited to $10,000. For transaction privilege tax purposes, the personal property rental tax does not apply to leasing or renting certified ignition interlock devices installed as a penalty for driving under the influence. Applies retroactively to taxable periods beginning September 1, 2004. Any claim for refunds based on the retroactive application must be submitted to the Department of Revenue by December 31, 2013, and the burden is on the taxpayer to establish by competent evidence the amount of tax paid. The aggregate amount of the refunds cannot exceed $10,000. The list of items that municipalities and special taxing districts are prohibited from levying a transaction privilege or use tax on is expanded to include the leasing or renting of certified ignition interlock devices installed as a penalty for driving under the influence. Definitions for the exemption from transaction privilege taxes for sales of food are modified. Repeals statute requiring the Department of Revenue to annually publish a list of categories of tax-exempt food items. Property and improvements used specifically and solely to manufacture biodiesel fuel that is 100 percent biodiesel and its by-products are classified as class 6 property for property tax purposes through December 31, 2023, instead of December 31, 2016. This classification is expanded to include property and improvements used specifically and solely to manufacture "motor vehicle biofuel" (defined) and its by-products. Retroactive to tax years beginning January 1, 2013, the maximum amount of contributions to 529 college savings plans that were not deducted from federal adjusted gross income that may be subtracted from Arizona gross income for individual income taxes is increased to $2,000 for a single individual or head of household, from $750, and to $4,000 for a married couple filing a joint return, from $1,500. The state income tax credit for voluntary cash contributions to a qualifying charitable organization is allowed even if the taxpayer does not itemize deductions for the taxable year. Effective tax years beginning January 1, 2014, for a taxpayer that is a regionally accredited institution of higher education with at least one university campus in Arizona and that meets other specified requirements, an election to treat sales from services as being in this state based on a combination of income producing activity sales and market sales is limited to the treatment of "sales for educational services" (defined). Retroactive to July 1, 2011, taxpayers who claimed first year tax credits and filed the certification required for the tax credit for employees hired in a qualified employment position are not required to file a certification for second or third year tax credits. AS SIGNED BY GOVERNOR.

The maximum amount of the individual income tax credit for contributions to a public school for the support of extracurricular activities or character education programs is increased to $400 for a single individual and $800 for a married couple filing jointly, from $200 for a single individual and $400 for a married couple filing jointly. For each tax year beginning with 2014, the Department of Revenue is required to adjust the dollar amounts of the tax credit according to the average annual change in the metropolitan Phoenix consumer price index published by the U.S. Bureau of Labor Statistics. The amounts cannot be revised downward.

The county treasurer of each county with a population of more than 2 million (Maricopa County) is authorized to deduct a monthly management fee from the earnings on monies maintained by the treasurer for agency pool participants, to be deposited in a county treasurer's management fund and used as appropriated by the board of supervisors for office personnel and operating expenses.

Establishes an individual and corporate income tax credit for tax years 2013 through 2022 for "qualified production expenditures" (defined) of at least $250,000 by a multimedia production company that produces one or more motion pictures in Arizona. The credit is a percentage of qualified expenditures based on the total expenditures and other factors. The credit is capped at $15 million for any individual production, and the aggregate amount of credits cannot exceed $70 million in any fiscal year. If the credit exceeds taxes due, the amount not used as an offset against income taxes is paid to the taxpayer in the same manner as a refund. Qualifications and an application process for companies wishing to claim the credit are established. The Arizona Commerce Authority must appoint a multimedia production liaison to approve the tax credits.

Establishes rules of taxation for the transfer of a "modular data center" (defined) from one "affiliated entity" (defined) to another where the transferor is a manufacturer of modular data centers in Arizona and the transferee stores, uses or consumes the modular data center in Arizona. For the purchase of raw or prepared material that is an ingredient or component part of a modular data center, if the affiliated transferee does not lease or rent the modular data center after the transfer, the transferor is deemed to have used or consumed the material and is subject to use tax on the purchase, and if the transferee leases or retns the modular data center after the transfer, the sale of the material is deemed a nontaxable resale sale and is exempt from retail transaction privilege and use taxes. The gross income from the sale of a modular data center to an unrelated third party purchaser is subject to retail transaction privilege and use taxes unless an exclusion, exemption or deduction applies. In determining value for sales from one affiliated corporation or person to another, municipalities that levy a transaction privilege or other similar tax are required to prescribe uniform and equitable rules for determining the value on which the tax is levied, corresponding as nearly as possible to the gross proceeds from the sale of similar products. Effective and applicable to tax periods beginning January 1, 2014. AS PASSED HOUSE.

Municipalities are prohibited from levying or assessing a municipality-wide tax or fee against property owners based on the size or value of the owner's real proprety for any public service provided by the municipality, except as authorized in statute. With voter approval, a municipality that has not enacted a property tax is authorized to levy property taxes dedicated to the costs of providing police, fire and emergency medical services to the municipality. The tax is a primary property tax and is subject to statutory property tax limitations. Monies collected from the tax must be used exclusively for the payment of costs described in the publicity pamphlet published at the time of the election. A person liable for the tax may seek an injunction against the municipality for the use of monies collected for purposes other than those in the pamphlet. If a municipality has assessed such a property tax after January 1, 2010, the municipality is required to submit a ballot measure to authorize the levy of the tax within four years after the effective date of this legislation. Retroactive to January 1, 2013. AS PASSED HOUSE.